Just over half of consumers in five Chinese cities have purchased from foreign merchants/marketplaces during the previous year, and U.S. retailers are a favorite destination: 89% of shoppers “bought American,” according to a survey conducted by PayPal. That’s nearly twice as high as the percentage for the second-place country, the UK, which attracted 46% of shoppers, and third-place Japan, at 42%.
Accessories (83%) and clothing (68%) were the product categories most frequently bought from U.S. merchants.
Product quality and “guaranteed authenticity” were the primary reasons these shoppers chose non-Chinese retailers, at 66% and 65% respectively. More than half (55%) were attracted by the richer variety of products offered by foreign brands and marketplaces.
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The survey, conducted by PayPal and the research institution Dataway, analyzed buying behavior from five major Chinese cities where overseas online shopping is popular: Beijing, Guangzhou, Hangzhou, Chengdu and Wuhan. The 2017 Chinese Cross-Border Shopping Report revealed that interviewed customers make an average of six purchases per year from overseas merchants, spending an average of RMB1197 ($183.23 USD) each time. That’s significantly higher than the average spent on domestic online shopping platforms, RMB694 ($106.23 USD).
Payment And Logistics Pose Challenges
If U.S. retailers want to build on their popularity with Chinese consumers, they still have a lot of work to do. Survey respondents identified their top challenges in making direct purchases, and most were focused on the mechanics of paying for products and getting them delivered. Key concerns included:
• Longer delivery times compared to domestic shopping: 40%;
• Payment security: 39% (percentage of consumers who had never made direct overseas online purchases);
• High shipping costs: 33%;
• Transport logistics not convenient/difficult to operate: 32%; and
• Inconvenience returning products: 31%.
These last-mile issues align with the results of another recent study: International Fulfillment: Digital Experiences For Cross Border And Tourist Customers. The July 2017 report from L2 focused on department stores and noted that while the majority of brands “provide international fulfillment options, on-site integration of these features is lagging. Only 15% of commerce-enabled brands allow customers to select both their currency and preferred language.”
Department store brands also do a poor job communicating their international shipping and return policies on their sites, with less than 25% promoting overseas shipping options on their home page.
French Brands Lead In International Shipping Prowess
The L2 report noted that while 57% of department store brands with e-Commerce offer international shipping to one or more countries outside their primary markets, “retailer sophistication varies widely across geographies. Brands based in France, the country that sees the greatest volume of tourists worldwide, have universally adopted global shipping capabilities.”
The percent of department store brands offering international shipping by home market are:
- France: 100%;
- UK: 73%;
- U.S.: 72%;
- South Korea: 67%;
- Germany: 25%;
- Japan: 0%; and
- Canada: 0%.
There’s also a major gap between consumer preferences and department store offerings in the payments area: 73% of shoppers prefer to select their currency at checkout, and 45% don’t feel comfortable making online purchases in foreign denominations. Yet only 25% of department store brands let customers change currencies to match their personal preferences or country of residence, and only 10% automatically adjust the transaction currency to match auto-detected customer locations. Just 15% provide shoppers with the ability to select currency and geography independently.
Providing information in a shopper’s local language is critical to removing friction and building conversions, but there are also significant gaps in this area. Even brands that translate their commerce-focused features still fail to offer customer service features in local languages. Just 45% of brands that have implemented such capabilities provide customer assistance in foreign languages, and even fewer (36%) provide frequently asked questions (FAQs) in multiple languages.
If U.S. retailers, particularly department stores, want to build on the strong interest of foreign shoppers, they will need to work hard to make their fulfillment and payment functionalities truly international.
For additional tools and tips on selling internationally, visit the PayPal PassPort.
